Investor Rights & Obligations
Unitholders have rights to information, to redeem at NAV-based prices and to be paid on time, with interest for delay, along with a few obligations of their own. This lesson sets out those rights, their time limits and what they do not cover.
Where the rights come from
A unitholder's rights come from the SEBI (Mutual Funds) Regulations, 2026 and SEBI's Master Circular, and every fund house is bound by them. They fall into four groups: information, exit, timely payment and redress.
Information
An investor is entitled to the scheme's documents, namely the Scheme Information Document (SID), the Statement of Additional Information (SAI) and the Key Information Memorandum (KIM), and to the scheme's portfolio disclosures.
An investor is also entitled to account statements. A consolidated account statement is sent for each month with a transaction, and half-yearly in any case.
Exit and timely payment
Unitholders may redeem units at NAV-based prices. Redemption proceeds are due within 3 working days of the request for every scheme; only schemes with 80% or more invested overseas get 5 working days. Older statements giving different timelines for equity, debt and liquid funds are superseded.
Income distribution (IDCW), when a scheme declares it, is paid within 7 working days of the record date. A late redemption or IDCW payout earns interest at 15% a year for the period of delay, and the asset management company (AMC) bears that cost. The same rate applies to a late refund after a new fund offer.
When the scheme changes
When a fundamental attribute changes, each unitholder gets written notice and at least 30 calendar days to exit at NAV with no exit load. There is no vote on such a change. A resolution of 75% of unitholders is relevant elsewhere: to ending the AMC's appointment or winding up a scheme.
Choosing the fund manager and the securities is the fund house's job, not a unitholder's right.
Redress, and the investor's part
A complaint goes first to the AMC, then to SEBI's SCORES portal, where an action-taken report is due within 21 calendar days, and then to online dispute resolution. There is no mutual fund ombudsman.
The investor's own obligations are to complete KYC, give accurate personal and bank details and bear the tax on any gains. No right protects against market losses, and no scheme may guarantee returns.
Rules at a glance
Which of these breaches a right? (illustrative)
Sana, 36, a designer in Jaipur, has two complaints about an equity scheme. First, its NAV fell 8% in a month. No right has been breached: that is market risk, which the scheme documents disclose.
Second, she redeemed some units and the money reached her bank on the sixth working day after her request. Here a right has been breached. The proceeds were due within 3 working days, so she is owed interest at 15% a year for the delay, borne by the AMC.
Interest on a delayed redemption (illustrative)
- Assumptions for the arithmetic only: redemption proceeds of ₹3,65,000 are paid 8 days after the last day allowed, and a 365-day year is used.
- Interest for a full year = 15% × ₹3,65,000 = ₹54,750.
- Interest for one day = ₹54,750 ÷ 365 = ₹150.
- Interest for 8 days = ₹150 × 8 = ₹1,200.
Result. The investor is owed ₹1,200 in addition to the ₹3,65,000, and the AMC bears it.
Key points
- Redemption proceeds are due within 3 working days of the request, or 5 for schemes with 80% or more invested overseas.
- IDCW is paid within 7 working days of the record date.
- A delay earns interest at 15% a year, borne by the AMC.
- A fundamental attribute change brings written notice and a load-free exit of at least 30 calendar days, not a vote.
- Investors must complete KYC and give accurate information; tax on gains is the investor's liability.
Common misunderstandings
- Unitholders do not vote on a fundamental attribute change: they get written notice and a load-free exit.
- Liquid and debt funds have no separate, shorter payout rule: 3 working days applies to every scheme, with 5 for schemes mostly invested overseas.
- The 15% interest is not paid out of the scheme: the AMC bears it.
- There is no mutual fund ombudsman: the route is the AMC, then SCORES, then online dispute resolution.
Questions people ask
Do unitholders vote on anything?
Not on a change in a fundamental attribute. A resolution of 75% of unitholders is relevant to ending the AMC's appointment or winding up a scheme.
Can a scheme promise a minimum return as a right?
No. No scheme may guarantee returns; the right is to redeem at NAV-based prices, whatever the NAV is on the day.
What is the folio lock?
A voluntary facility, available from 30 April 2026, under which an investor may choose to lock a folio.
What this lesson relies on
- SEBI (Mutual Funds) Regulations, 2026 — unitholders' rights and change in fundamental attributes
- SEBI Master Circular for Mutual Funds (20 March 2026) — timelines for redemption and IDCW payouts, interest on delay, account statements
- SEBI SCORES 2.0 framework (in force 1 April 2024) and online dispute resolution framework
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.